Rough sales hurt by slowdown

In the first half of 2001, sales of rough gem diamonds by the Diamond Trading Co. (DTC), the marketing arm of De Beers, were hampered by a slowdown in the global economy, particularly in the U.S., which accounts for close to half of the world’s retail diamond jewelry sales.

The DTC sold US$2.62 billion worth of uncut stones, down 25.5% from a record US$3.52 billion in the first half of 2000. Gary Ralfe, managing director of De Beers, says first-half sales met targeted projections. Sales for the year are targeted to total US$4.8 billion.

“The rough and polished markets are both in a state of some considerable gloom at the moment,” says Ralfe. A poor Christmas season led to a hangover of inventory, which continues to inhibit polished sales, especially into the U.S. retail pipeline. “We’re relying on a resumption of economic growth in the second half of the year in America, in order to restore equilibrium in the diamond market, and particularly to bring back confidence into the rough and polished markets,” says Ralfe.

Lower diamond jewelry sales in the U.S. and a continuing depressed market in Japan helped push down retail diamond jewelry sales worldwide during the first half by an estimated 5-7%, compared with the corresponding period last year.

De Beers now operates as a private company, having been delisted following a US$19.7-billion takeover by a consortium comprising Anglo American (aauk-q) and the Oppenheimer family-run Central Holdings. Each of those concerns has a 45% interest in De Beers. Debswana Diamond, a 50-50 joint venture between De Beers and the government of Botswana, holds the remaining 10%.